President Bush has dismissed as "baseless gossip" suggestions that the United States is preparing to attack Iran because of its nuclear program.

During a wide-ranging interview with Arab television network al-Arabiya released Friday, Mr. Bush said all options are on the table to deal with Iran, but he said he is working diplomatically to solve the problem.

Iran's president, Mahmoud Amadinejad, recently told the United Nations General Assembly that he will disregard U.N. Security Council resolutions demanding Iran stop enriching uranium. Highly enriched uranium can be used to build a nuclear weapon, but Iran says its nuclear program is to produce energy.

Regarding the Israeli-Palestinian issue, Mr. Bush said he believes it is both possible and necessary for Palestinians and Israelis to live peacefully in two states side-by-side. He said the United States is prepared to help Palestinians with security and economic aid to help them better their lives.

Mr. Bush also discussed Iraq. He said the first step in achieving balance in Iraq is helping Iraqis secure their neighborhoods to keep radical elements from controlling their society.

Democrats in the U.S. Congress have been trying to pass legislation that will limit further U.S. involvement in Iraq, something the president has steadfastly opposed.